Wall Street is currently basking in a vigorous “Trump rally,” with the Dow rising more than 1000 points since the election. The rally is driven by analysts who are salivating over the future prospect of sweeping deregulation of many markets. But there is also chorus of concern from dozens of financial experts, that the global financial markets are “whistling in the graveyard,” acting in a classicly irrational manner. Experts cite a host of issues both financial and geopolitical, among them Trump’s intention to exit TPP, NAFTA, and the COP21 Climate Agreement. Combined with rising geopolitical tensions with China, North Korea, and Iran, a perfect storm of global uncertainty and instability is forming.

Global Financial Contagion, is a well-understood phenomenon among economists, but less so among the general public. Financial contagion refers to “the spread of market disturbances — mostly on the downside — from one country to the other, a process observed through co-movements in exchange rates, stock prices, sovereign spreads, and capital flows.” Financial contagion can be a potential risk for countries who are trying to integrate their financial system with international financial markets and institutions. It helps explain an economic crisis extending across neighboring countries, regions, or in the worst case, the entire global economy.

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David Mayes

Founding Partner, Vendange Partners, UBC adjunct faculty, Intel alumni, technology assessment, international business, clean tech, fly fisherman, native Californian and citizen of France, who has been very fortunate to have traveled, lived and worked all over the globe. My wonderful wife, Isabelle has reintroduced me to my French Provencal heritage.